CSX Transp., Inc. v. Ala. Dep't of Revenue

• Decision Date: 22 February 2011
• Docket Number: No. 09–520.,09–520.
• Citation: 131 S.Ct. 1101,179 L.Ed.2d 37,562 U.S. 277
• Parties: CSX TRANSPORTATION, INC., Petitioner, v. ALABAMA DEPARTMENT OF REVENUE et al.
• Court: U.S. Supreme Court

562 U.S. 277

131 S.Ct. 1101

179 L.Ed.2d 37

CSX TRANSPORTATION, INC., Petitioner,

v.ALABAMA DEPARTMENT OF REVENUE et al.

No. 09–520.

Supreme Court of the United States

Argued Nov. 10, 2010.

Decided Feb. 22, 2011.

Carter G. Phillips, Washington, DC, for petitioner.

Melissa A. Sherry, Washington, DC, for the United States as amicus curiae, by special leave of the Court, supporting the petitioner.

Corey L. Maze, Solicitor General, Montgomery, AL, for respondents.

Robert N. Hochman, Tacy F. Flint, Sidley Austin LLP, Chicago, IL, Ellen M. Fitzsimmons, Joel W. Pangborn, CSX Corporation, Jacksonville, FL, Carter G. Phillips, Counsel of Record, Sidley Austin LLP, Washington, DC, James W. McBride, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Washington, DC, Peter J. Shudtz, CSX Corporation, Washington, DC, Stephen D. Goodwin, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Memphis, TN, counsel for petitioner.

Margaret Johnson McNeill, Assistant Counsel, State of Alabama, Department of Revenue, Montgomery, AL, Troy King, Attorney General, Corey L. Maze, Solicitor General, Counsel of Record, Misty S. Fairbanks, William G. Parker, Jr., Assistant Attorneys General, Office of the Alabama, Attorney General, Montgomery, AL, for respondents.

Justice KAGAN delivered the opinion of the Court.

The Railroad Revitalization and Regulatory Reform Act of 1976 restricts the ability of state and local governments to levy discriminatory taxes on rail carriers. We consider here whether a railroad may invoke this statute to challenge sales and use taxes that apply to rail carriers (among others), but exempt their competitors in the transportation industry. We conclude that the railroad may do so.

I

A

Congress enacted the Railroad Revitalization and Regulatory Reform Act of 1976 (Act or 4–R Act) to "restore the financial stability of the railway system of the United States," among other purposes. § 101(a), 90 Stat. 33. To help achieve this goal, Congress targeted state and local taxation schemes that discriminate against rail carriers. Burlington Northern R. Co. v. Oklahoma Tax Comm'n, 481 U.S. 454, 457, 107 S.Ct. 1855, 95 L.Ed.2d 404 (1987). The provision of the Act at issue here, now codified at 49 U.S.C. § 11501,¹ bars States and localities from engaging in four forms of discriminatory taxation. 90 Stat. 54.

Section 11501(b) describes the prohibited practices. It begins with three provisions addressed specifically to property taxes; it concludes with a catch-all provision concerning other taxes. According to § 11501(b), States (or their subdivisions) "may not":

"(1) Assess rail transportation property at a value that has a higher ratio to the true market value of the rail transportation property than the ratio that the assessed value of other commercial and industrial property in the same assessment jurisdiction has to the true market value of the other commercial and industrial property.

"(2) Levy or collect a tax on an assessment that may not be made under paragraph (1) of this subsection.

"(3) Levy or collect an ad valorem property tax on rail transportation property at a tax rate that exceeds the tax rate applicable to commercial and industrial property in the same assessment jurisdiction.

"(4) Impose another tax that discriminates against a rail carrier."

The following subsection confers jurisdiction on federal courts to "prevent a violation" of § 11501(b) notwithstanding the Tax Injunction Act, 28 U.S.C. § 1341, which ordinarily prohibits federal courts from enjoining the collection of state taxes when a remedy is available in state court. § 11501(c).²

B

Petitioner CSX Transportation, Inc. (CSX) is an interstate rail carrier that operates in Alabama and pays taxes there.

Alabama imposes a sales tax of 4% on the gross receipts of retail businesses, Ala.Code § 40–23–2(1) (2010 Cum.Supp.), and a use tax of 4% on the storage, use, or consumption of tangible personal property, § 40 – 23 – 61(a) (2003). Railroads pay these taxes when they purchase or consume diesel fuel. But railroads' main competitors—interstate motor and water carriers—are generally exempt from paying sales and use taxes on their fuel (although fuel for motor carriers is subject to a separate excise tax).³

Alleging that Alabama's tax scheme discriminates against railroads in violation of § 11501(b)(4) of the 4–R Act, CSX sued respondents, the Alabama Department of Revenue and its Commissioner (Alabama or State), in Federal District Court. In particular, CSX complained that the State could not impose sales and use taxes on railroads' purchase and consumption of diesel fuel while exempting motor and water carriers from those taxes. App. 22 (Complaint ¶ 26).

The District Court dismissed CSX's suit as not cognizable under the 4–R Act, and the United States Court of Appeals for the Eleventh Circuit affirmed in a brief per curiam decision. 350 Fed.Appx. 318 (2009). The Eleventh Circuit rested on its earlier decision in Norfolk Southern R. Co. v. Alabama Dept. of Revenue, 550 F.3d 1306 (2008), which involved a nearly identical challenge to the application of Alabama's sales and use taxes.

In Norfolk Southern, the Eleventh Circuit rejected the plaintiff railroad's challenge, principally in reliance on this Court's decision in Department of Revenue of Ore. v. ACF Industries, Inc.,

510 U.S. 332, 114 S.Ct. 843, 127 L.Ed.2d 165 (1994). In that case, we held that a railroad could not invoke § 11501(b)(4) to challenge a generally applicable property tax on the basis that certain non-railroad property was exempt from the tax. Id., at 335, 114 S.Ct. 843. The Eleventh Circuit recognized that the case before it involved sales and use taxes—not property taxes, which the statutory scheme separately addresses. Norfolk Southern, 550 F.3d, at 1314. The court concluded, however, that this difference was immaterial, and accordingly held that a railroad could not object to Alabama's sales and use taxes simply because the State provides exemptions from them. Id., at 1316.

CSX petitioned for a writ of certiorari, arguing that the Eleventh Circuit had misunderstood ACF Industries and noting a split of authority concerning whether railroads may bring a challenge under § 11501(b)(4) to non-property taxes from which their competitors are exempt.⁴ We granted certiorari, 560 U.S. 964, 130 S.Ct. 3409, 177 L.Ed.2d 323 (2010), and now reverse.

II

We begin, as in any case of statutory interpretation, with the language of the statute. Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, ––––, 130 S.Ct. 2149, 2156, 176 L.Ed.2d 998 (2010). Section 11501(b)(4) provides that a State may not "[i]mpose another tax that discriminates against a rail carrier." CSX wishes to bring an action under this provision because rail carriers, but not motor or water carriers, must pay Alabama's sales and use taxes on diesel fuel. To determine whether this suit may go forward, we must therefore answer two questions. Is CSX challenging "another tax" within the meaning of the statute? And, if so, might that tax "discriminate" against rail carriers by exempting their competitors?⁵

An excise tax, like Alabama's sales and use tax, is "another tax" under subsection (b)(4).⁶ The 4–R Act does not define "tax"; nor does the statute otherwise place any matters within, or exclude any matters from, the term's ambit. In these circumstances, we look to the word's ordinary definition, Asgrow Seed Co. v. Winterboer, 513 U.S. 179, 187, 115 S.Ct. 788, 130 L.Ed.2d 682 (1995), and we note what taxpayers have long since discovered—that the meaning of "tax" is expansive. A State (or other governmental entity) seeking to raise revenue may choose among multiple forms of taxation on property, income, transactions, or activities. "[A]nother tax," as used in subsection (b)(4), is best understood to refer to all of these—more precisely, to encompass any form of tax a State might impose, on any asset or transaction, except the taxes on property previously addressed in subsections (b)(1)-(3). See Burlington Northern R. Co. v. Superior, 932 F.2d 1185, 1186 (C.A.7 1991) (Subsection (b)(4) includes "an income tax, a gross-receipts tax, a use tax, an occupation tax ...—whatever"). The phrase "another tax" is a catch-all.

In particular, we see no reason to interpret subsection (b)(4) as applying only to the gross-receipts taxes—known as "in lieu" taxes—that some States imposed instead of property taxes at the time of the Act's passage. See Brief for Respondents 53–55; Brief for State of Washington et al. as Amici Curiae 20–22. The argument in favor of this construction relies on the House Report concerning the bill, which described subsection (b)(4) as prohibiting "the imposition of ... the so-called ‘in lieu tax.’ " H.R.Rep. No. 94–725, p. 77 (1975). But the Conference Report on the final bill abandoned the House Report's narrowing language and described the subsection as it was written—as prohibiting, without limitation, "the imposition of any other tax which results in the discriminatory treatment of any" railroad. S. Conf. Rep. No. 94–595, pp. 165–166 (1976) ; accord, S.Rep. No. 94–499, p. 65 (1975). And the statutory language is the real crux of the matter: Subsection (b)(4) speaks both clearly and broadly, and a legislative report misdescribing the provision cannot succeed in altering it.⁷

Nor do we agree with the Eleventh Circuit's apparent view that CSX does not challenge "another tax" because its complaint relies on the exemptions the State has given. See Norfolk Southern, 550 F.3d, at 1315 ("The language of section (b)(4) prohibits a discriminatory ‘tax’ not a discriminatory tax exemption"); Brief for American Trucking Assns., Inc. as Amicus Curiae 9. What the complaint protests is Alabama's imposition of taxes on the fuel CSX uses; what the complaint requests is that Alabama cease to collect those taxes from CSX.App. 23. The exemptions, no doubt, play a central role in CSX's argument: They demonstrate, in CSX's view, that the State's sales and use taxes...